Inside The Industry: Consumer Travel Trends

Despite rising living costs, pent up post-covid consumer demand for travel continues. The Mastercard 2023 Travel Trends report notes that global leisure travel has remained robust, up by around 31% in March 2023 compared to the same period in 2019. However, the rising cost of living combined with a growing demand for sustainable travel presents travellers with a dilemma. Let’s dive into it.

Cost of Living Impacting Consumer Spend

The Simon Kucher report on 2023 travel trends, divides consumers into three segments due to inflation. Whilst the budget of ‘stable’ travellers remains the same, ‘cautious’ travellers plan to spend 6% less and ‘splurge’ travellers plan to spend 20% more on average. In Deloitte’s Global State of the Consumer Tracker, the percentage of global travellers leaning toward the cheapest flight itineraries, instead of the most convenient, climbed from 21% in October to 35% in November 2022. Inflation has also caused more consumers to book holidays in advance, rather than leaving trips to the last minute, with 41% choosing to book ahead due to fear of inflation.

Rising costs have also impacted business travel budgets. Around 20% of consumers now choose not to travel for business, and those who do are opting for shorter work trips. Almost two out of three businesses encourage their employees to travel by train instead of plane. This may be in part due to the move towards sustainable travel. Whilst consumers are cutting back, nearly one in three are willing to pay more for sustainable options, though mostly on food and accommodation as opposed to carbon emission charges. On average, 55% are willing to spend more on sustainable food, accommodation and flights, whereas only 20% would agree to pay for carbon emission charges on a flight.

Consumers Look To Make Sustainable Travel Choices

According to the Booking.com 2023 Sustainable Travel report consumers are divided on sustainable travel. Whilst the cost of living is causing some consumers to spend more intentionally, with the perception that sustainable travel options are too expensive, others are willing to pay more to drive impact. 49% believe more sustainable travel options are too expensive, whereas 43% would be willing to pay more. However, as a whole, 80% of those surveyed confirm that travelling more sustainably is important to them. Sustainable travel choices are prevalent on a more micro level in consumer behaviour, be it through turning off air conditioning when outside of accomodation, for example, or reusing towels and bottles.

So, how can travel brands cater to the growing consumer demand for sustainable yet affordable options?

Travel brands may want to consider offering discounts or incentives for eco-friendly options. The report notes that 42% of consumers surveyed would be encouraged to travel sustainably with reward points for making sustainable choices that could be used for perks or discounts through online booking sites. Customer retention is more important than ever during periods of inflation, thus brands would be wise to focus on nurturing existing customer relationships. Rewards schemes will not only help to build brand trust and loyalty, but satisfy consumer demand to make sustainable travel choices.

More travellers are seeking credible assurance when booking travel, with 65% of consumers stating they would feel better about staying in a particular accommodation if they knew it had a sustainable certification or label. However, 39% of those surveyed do not trust that sustainable travel options, labelled as so, are truly sustainable. This can, in part, be attributed to a growing awareness of greenwashing, which we explore in depth in our article on the state of ethical consumption in 2023. On a wider scale, brand trust has declined across all industries, which can be combated by greater transparency. 69% of those surveyed were interested in learning more about why specific options are considered to be more sustainable, thus by better communicating sustainability efforts, travel brands should have greater success when appealing to the ethical consumer.